The IRS audited millionaires and collected $160 million in debt.
The IRS collected $160 million this year by auditing millionaires who failed to pay their taxes. Writes about this CNN.
Efforts to target the rich have intensified recently thanks to increased federal funding provided by Democrats last year as part of the Inflation Relief Act. Republicans have criticized the amount of money the IRS receives, and future funding remains uncertain.
In September, the IRS began seeking refunds from about 1600 taxpayers with incomes over $1 million and owed more than $250. The agency has now closed 100 of those cases, collecting $122 million.
Earlier this year, the IRS collected $38 million from more than 175 taxpayers. This brings the total amount recovered this year to $160 million.
“In my opinion, the data that we've seen to date, in terms of the amount we've collected, indicates that this is a very important job for us,” said IRS Commissioner Danny Werfel.
In one successful case last month, a man was ordered to pay more than $15 million in damages for falsifying personal expenses.
Another taxpayer pleaded guilty last week to filing false income returns and embezzling more than $670 from his business. The man spent $000 on personal expenses and $110 on gambling, according to the IRS.
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Increased tax enforcement efforts are aimed at reducing the so-called tax gap - the difference between the amount owed and the amount actually collected by the tax service on time. The latest estimate is that $2021 billion was not collected for the 688 tax year.
New checks of large corporations
The IRS plans to pay special attention to combating large corporations that do not pay their taxes.
The IRS will crack down on U.S. subsidiaries of foreign companies that distribute goods in the U.S. and fail to pay them the proper royalties on profits they make. Tax compliance notices will begin being sent to about 150 subsidiaries next month to “reiterate their U.S. tax obligations and encourage them to take corrective action,” it said.
When the new IRS accountants begin work in early 2024, they are expected to begin 60 audits of the largest corporate taxpayers. IRS accountants will screen corporations using a combination of artificial intelligence and specialized knowledge to better detect tax fraud. The use of technology is intended to help avoid unnecessary audits of taxpayers.
Reconstruction of the tax service
The Inflation Reduction Act, which included provisions to give the IRS $80 billion over 10 years, allowed the agency to begin a complete overhaul of its operations. Work is underway to hire new employees, update technology, improve service to taxpayers and check for tax fraud.
The new tools have already helped improve the IRS's service to taxpayers. During the 2023 filing season, the IRS answered 3 million calls and reduced phone wait times to three minutes, down from 28 minutes a year earlier.
The IRS is currently working to create its own free tax filing program, known as Direct File, which will be rolled out as a limited pilot program next year.
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The IRS, among other things, has developed a plan to convert all paper tax returns to digital format by 2025. The move is expected to cut processing times in half and speed up refunds by four weeks.
Republicans are raising questions about whether the $80 billion investment in the IRS will lead to more audits of ordinary Americans. Earlier this year, Republican lawmakers were able to return $20 billion of those funds as part of a bipartisan deal to address the debt ceiling.
The White House says the cuts won't lead to fundamental changes to how the IRS operates in the next few years. U.S. President Joe Biden's administration officials have also repeatedly said taxpayers earning less than $400 a year will not face increased audits as a result of the new funding.
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